Former Gov. Ed Rendell and Philadelphia Flyers owner Ed Snider are leading a "civic-minded" effort to buy Philadelphia's two largest newspapers, Rendell said Friday.
The six-person group submitted a non-binding "letter of interest" Thursday in Philadelphia Media Network, which operates The Philadelphia Inquirer and Philadelphia Daily News.
News reports surfaced this week that two hedge funds with major stakes in the company want to sell. The firms, Alden Global Capital and Angelo Gordon, had led the creditors' $139 million takeover of the company at a September 2010 bankruptcy auction.
Rendell could not confirm their intentions, but said a third party has been reaching out to potential investors in recent weeks. The media company would be bought outright, he said.
His group includes George Norcross, an insurance executive, Cooper Hospital chairman and Democratic Party powerbroker in southern New Jersey; Lewis Katz, a parking and banking magnate from Cherry Hill, N.J.; technology entrepreneur Krishna Singh of Moorestown, N.J.; and William P. Hankowsky, chairman of Liberty Property Trust, a commercial developer.
"These are civic-minded people who believe we should have healthy, strong newspapers," Rendell said on a conference call Friday afternoon with reporters. He would be the only non-equity partner.
"They're as big a believer as I am that the Philadelphia Media Network can turn a profit, but that's not the main motivation," he said. "These folks, except for me, don't need to make any more money."
Rendell says the group would fight to keep both the broadsheet Inquirer and tabloid Daily News in business, while further developing the Philly.com website and other digital products. Rendell praised current Publisher Greg Osberg and said he hoped he will remain at the helm.
Rendell would seek additional investors if the plan moves forward, to strengthen the bid.
Financier Raymond Perelman, who with his son, Revlon Inc. Chairman Ronald O. Perelman, bid $129 million for the newspapers in 2010, is also mulling a bid. Yet he concedes that the newspaper industry is "deteriorating."
"I think Philadelphia should have a newspaper, but how far do you go to do that, you know? That's the key question," the 94-year-old Perelman, a major philanthropist in the region, said Friday. "At the right price and the right situation, it would happen. But at a price that's really high, you have to think about it."
The New York Post reported this week that Alden hoped to sell the company for $100 million and cash out its 30 percent stake, and that Angelo Gordon also wants to sell. The newspaper reported that Evercore Partners, a New York investment bank, has been hired to handle the sale. Evercore declined to comment Friday.
Philadelphia Media Network officials also won't comment on the reported sale, spokesman Mark Block said Friday.
Local investors paid $515 million for the newspapers in 2006, but filed for bankruptcy in early 2009. The creditors have since sold the iconic newspaper building and plan to move staff to much smaller space in a long-vacant department store this year.
Some editorial functions will be merged, but the company wants to maintain separate brands for the two newspapers, the website and a new weekend publication called SportsWeek, according to Bill Ross, executive director of the local newspaper guild.
Rendell also plans to approach powerful Philadelphia labor leader Johnny Dougherty and others about joining the group, he said.
Doughterty, Snider, Norcross and Rendell have all been frequent newsmakers in the region.
"The danger is that they want to influence the news. But because it's such a diverse group of people, they don't have any sort of common .... cause that I could see them all rallying around," said Kelly McBride, who teaches media ethics at The Poynter Institute, the journalism non-profit in St. Petersburg, Fla.
Media analyst Ken Doctor said any buyer should be ready to fund not just the purchase price, but millions more to subsidize quality journalism for at least the first few years. The recent serial ownership of newspapers in Philadelphia and elsewhere shows that journalism should now be seen as a civic cause, like education and the arts, he said.
"If not, given the economic climate, we're just going to see more and more cuts," Doctor said.